Ephraim Sellick v Bible Lane Enterprises Pty Ltd T/A Flash Eats
[2021] FWC 2123
•19 APRIL 2021
| [2021] FWC 2123 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Ephraim Sellick
v
Bible Lane Enterprises Pty Ltd T/A Flash Eats
(U2020/14288)
DEPUTY PRESIDENT DEAN | SYDNEY, 19 APRIL 2021 |
Application for an unfair dismissal remedy – dismissal unfair - compensation ordered.
[1] Mr Ephraim Sellick was employed by Bible Lane Enterprises Pty Ltd T/A Flash Eats (Bible Lane) until he was summarily dismissed on 14 October 2020.
[2] On 1 November 2020 Mr Sellick made an application pursuant to s.394 of the Fair Work Act 2009 seeking relief for his alleged unfair dismissal by Bible Lane.
[3] There is no dispute that Mr Sellick is a person protected from unfair dismissal, having met all requirements in s.382 of the Act. Bible Lane objects to the application on the basis that it is a small business and the dismissal was consistent with the Small Business Fair Dismissal Code (the Code).
[4] At the hearing of the application on 23 February 2021, Mr Michael Quincey O’Neill of Legal Aid ACT appeared with permission for Mr Sellick and Ms Parkinson (Human Resources Manager/Chief Financial Officer) appeared for Bible Lane. Oral evidence was given by Mr Sellick and Ms Parkinson.
Background
[5] Mr Sellick commenced employment with Bible Lane on 13 July 2019 as a Fast Food Attendant.
[6] In January 2020 he was promoted to the position of Shift Supervisor. In this role, he was required to, amongst other duties, prepare a draft roster through an online program known as Easyemployer.
[7] Mr Sellick was notified of his dismissal on 14 October 2021 when he was handed a letter of termination shortly after a meeting with the business owner, Mr Parkinson. The letter set out the reasons for the dismissal and reads:
“Dear Ephraim
Termination of Employment
I am writing to you with regards to your conduct during your employment with Flash.
I refer to our meeting on 14 October 2020 which was attended by Mr Peter Jenkins, you and the writer.
On Friday 9 October 2020 at 1.25pm you messaged Kate Parkinson to advise that Flash’s draft roster was prepared and ready for authorization and publishing at her convenience.
At 3.25pm on Friday 9 October 2020, Ms Parkinson modified the draft roster including removing you from a shift on Wednesday 14 October 2020 and assigning that shift to another staff member.
The roster was then published and the shift on Wednesday, 14 October 2020 was communicated to the other staff member.
On or about 5.35pm on Friday 9 October without consent you logged into the Easy Employer rostering system and unassigned a shift from another employee and reassigned that shift to yourself.
You did not seek approval for this change nor did you advise us that you made this change to our business rostering and subsequently our businesses financial position.
Further, on the evening of 13 October 2020, Ms Parkinson received an email from ACT Health advising they had attended upon Flash on the evening of Saturday 10 October 2020. We understand that ACT Health spoke to another staff member at Flash. We have been advised that the conversation with ACT Health was relayed to you as the shift supervisor. You did not notify us that ACT Health had attended upon our business, nor did you contact us when you were told they attended upon us. Failure to do so has meant we have to formally respond to ACT Health’s COVID concerns about our business.
As discussed during the meeting we informed you that your actions of changing our business documents without consent, and failure to advise us that our governing body, ACT Health attended our premise seeking COVID information constituted serious misconduct warranting summary dismissal.
Accordingly, your employment with Bible Lane Enterprises Pty Ltd is terminated as at 14 October 2020.
Yours faithfully
FLASH EATS”
[8] Bible Lane argued that Mr Sellick’s conduct constituted serious misconduct warranting summary dismissal and the Code was followed when it dismissed Mr Sellick on 14 October 2020.
[9] Mr Sellick denied the allegations of misconduct. He also disputed that Bible Lane is a small business and in the alternative argued that his dismissal was not consistent with the Code.
Whether Respondent is a small business
[10] The definition of a ‘small business employer’ is provided in s.23 of the Act:
23 Meaning of small business employer
(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.
(2) For the purpose of calculating the number of employees employed by the employer at a particular time:
(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and
(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.
(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.
(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):
(a) the employee who is being dismissed or whose employment is being terminated; and
(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.
[11] The ‘particular time’ refers to the time of the person’s dismissal.
[12] Section 12 of the Act provides that an associated entity has the meaning given by section 50AAA the Corporations Act 2001:
50AAA Associated entities
(1) One entity (the associate) is an associated entity of another entity (the principal) if subsection (2), (3), (4), (5), (6) or (7) is satisfied.
(2) This subsection is satisfied if the associate and the principal are related bodies corporate.
(3) This subsection is satisfied if the principal controls the associate.
(4) This subsection is satisfied if:
(a) the associate controls the principal; and
(b) the operations, resources or affairs of the principal are material to the associate.
(5) This subsection is satisfied if:
(a) the associate has a qualifying investment (see subsection (8)) in the principal; and
(b) the associate has significant influence over the principal; and
(c) the interest is material to the associate.
(6) This subsection is satisfied if:
(a) the principal has a qualifying investment (see subsection (8)) in the associate; and
(b) the principal has significant influence over the associate; and
(c) the interest is material to the principal.
(7) This subsection is satisfied if:
(a) an entity (the third entity) controls both the principal and the associate; and
(b) the operations, resources or affairs of the principal and the associate are both material to the third entity.
(8) For the purposes of this section, one entity (the first entity) has a qualifying investment in another entity (the second entity) if the first entity:
(a) has an asset that is an investment in the second entity; or
(b) has an asset that is the beneficial interest in an investment in the second entity and has control over that asset.
[13] Bible Lane submitted that at the time Mr Sellick was dismissed it operated Flash Eats and Piccolo’s Cafe with 9 employees on its payroll. It provided in support of its contention a Payroll Activity Summary for the relevant period. Of the 9 employees, 7 worked at Flash Eats and 2 worked at Piccolo’s Cafe.
[14] Mr Sellick contended that Flash Eats was not a small business because it had several associated entities namely, Tollgate Nominees Pty Ltd (Tollgate), Sparks Canberra Pty Ltd (Sparks) and Foundry Enterprises Pty Ltd (Foundry Enterprises). A number of extracts from ASIC searches relating to these entities were tendered.
[15] It was submitted on behalf of Mr Sellick that Tollgate and Sparks each have a 33 per cent share of Bible Lane and Mr Parkinson and Ms Parkinson are a sole director of Tollgate and Sparks respectively. Mr Parkinson and Ms Parkinson also each have a 33 per cent share of Foundry Enterprises. Therefore, the two of them together have a majority control and interest in all of these entities.
[16] Further, it was submitted that Foundry operates a nightclub named Hopscotch Bar and the employees of that entity would push the total number of employees of Bible Lane to 15 or more.
[17] In cross examination, Ms Parkinson was asked questions about these entities and described her involvement with the companies as follows:
1. She is the director of Sparks Canberra Pty Ltd but ‘not a beneficiary’. 1
2. She and Mr Parkinson are two separate individuals and they do not have control of any company where they are shareholders at 33 per cent. 2
3. She is the sole director of Sparks, not its sole beneficiary and has not received any discretionary income from the company. 3
4. She is not aware if Mr Parkinson has a 100 per cent interest in Tollgate: “He is not my husband, so I’m unaware what his discretionary family trust make-up is.” 4
5. Foundry Enterprises operates Hopscotch Bar but under a different directorship. 5
[18] Ms Parkinson gave evidence that Bible Lane did not operate any other businesses in Australia other than Flash Eats and Piccolo’s Cafe at the time of Mr Sellick’s dismissal 6.
[19] Determining the relationship between different entities is not an easy task and an applicant without a thorough investigation of the affairs of companies that may be linked is in a very difficult situation. I am not entirely persuaded that Ms Parkinson’s evidence disproves that the companies of which she holds an office or has some interest, are not in fact related entities. Nonetheless, the evidence is inconclusive to support a definite finding. It was put to the Commission by Mr Quincey O’Neill that employees of Hopscotch Bar, a business operated under Foundry Enterprises, should be included in calculating the total number of employees of Bible Lane. However, no evidence was adduced as to the number of employees Hopscotch Bar has. In addition, it was Ms Parkinson’s evidence that Foundry Enterprise does not have any employees.
[20] In the absence of any evidence as to the number of employees of the other entities even if one or more of these entities were grouped it cannot be established that Bible Lane has 15 or more employees such that the Code does not apply.
[21] Consequently, I find that Bible Lane is a small business employer for the purpose of the present case.
Whether the dismissal was consistent with the Code
[22] Given my finding that Flash Eats is a small business employer, it is therefore necessary to consider whether the dismissal was consistent with the Code. If I am satisfied that the Code was complied with, Mr Sellick’s application must be dismissed by virtue of s.385 of the Act. If it is determined that the Code was not complied with, I must then determine whether the dismissal was unfair having regard to the criteria prescribed in s.387 of the Act.
[23] Section 388 of the Act provides that a person’s dismissal was consistent with the Code if:
(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and
(b) the employer complied with the Code in relation to the dismissal.
[24] The Code relevantly reads as follows:
Summary dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
Other dismissal
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.
The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.
Procedural matters
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to the Fair Work Commission, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.
The case for Sellick
[25] Mr Sellick provided two statements in these proceedings.
[26] The reasons relied upon by the Respondent for his dismissal were summarised by him as that he had:
a. changed the Respondent’s business documents without consent and
b. failed to advise the Respondent that ACT Health attended the Respondent’s premises seeking Covid-19 information.
[27] Mr Sellick denied any wrongdoing and gave his version of events leading to his dismissal.
Altering the roster
[28] On 9 October 2020, shortly after he sent the draft roster to Ms Parkinson, he received the email from Easyemployer at about 1.27 pm containing the roster for the week 12 to 18 October. At about 3.30 pm that day he received another email from Easyemployer with a final published roster. Mr Sellick said that he did not notice this email at the time. Instead, he typically relied on the Easyemployer programme itself to be informed of any changes made to the roster which also allowed him to see other staff’s roster at the same time.
[29] In the afternoon on 9 October 2020, he logged onto Easyemployer and noticed that his shift on 14 October 2020 had been reassigned to Mr Reicheneder. Given he had not received any explanation from Ms Parkinson about this change he thought it was an error with the programme so he reassigned the shift back to himself. His understanding was that both Mr Reicheneder and Ms Parkinson would have received a further notification of this change he had made.
[30] At no point during the preparation and publishing of this roster did Ms Parkinson or anyone from senior management communicate with him about any changes to the roster they thought should be made. And from the time he reassigned the shift to himself to his dismissal on 14 October he was not informed that this change of the roster he made was an issue nor was he at any time instructed to rectify this change. He was not notified of any concerns from Bible Lane about the change he made to the final roster until the time of his dismissal on 14 October 2020.
[31] Mr Sellick in his statement outlined the process of preparing the roster. According to him, he would first put the relevant information into Easyemployer, he then cross-check the roster with each employee’s stated availabilities as supplied via the programme. Once he did that, he would text Ms Parkinson from his personal mobile phone to advise her that the draft roster had been prepared and ready to be published. Once the roster was checked and published by Ms Parkinson, the system would send an email to all staff members with a copy of their upcoming roster attached.
[32] Mr Sellick added that if Ms Parkinson wanted to change the roster, she would advise him of the changes to be made and he would then made those changes and resubmit to her to publish. Further, if any staff wanted extra shifts they would ordinarily contact him and he would try and arrange their requests.
[33] Mr Sellick said that he was never informed that he needed consent from management to log onto the roster system nor to make changes to any roster and he was never informed of any procedures to follow. He was given permission which allowed him to made change to draft, current and future rosters and had indeed made changes to final roster in the past to rectify mistakes and to arrange shift swaps between staff to cover absences from work.
Inspection from ACT Health
[34] In terms of the inspection from ACT Health on 10 October, Mr Sellick’s evidence was that he attended for his shift at about 7.30 pm that night and was told by Mr Reichender about the inspection. Mr Sellick gave evidence that he had a conversation with Mr Reicheneder to the following effect:
Mr Sellick: “okay, have you told the owners?”
Mr Reicheneder: “yeah, I’ve told them. There was an email sent.”
Mr Sellick: “okay, do you think I need to let them know?”
Mr Reicheneder: “no, no, no. It should all be good”
[35] Mr Sellick said that based on this conversation he considered the management had been notified of the matter.
[36] Mr Sellick said that during his time working for Bible Lane he was never told that it was part of his responsibilities to inform senior management of events that had occurred outside his own shifts.
Dismissal on 14 October 2020
[37] Mr Sellick gave evidence that on 14 October 2020 he was in the kitchen preparing for his shift when he was approached by Mr Parkinson and Mr Jenkins (Assistant Manager).
[38] Mr Parkinson asked him if Mr Reicheneder was working that day and he responded ‘No, he’s not on today’. Mr Parkinson then responded by saying: ‘well, he was supposed to”. Mr Parkinson then said to him that ‘we need to have a talk’.
[39] Mr Sellick’s evidence was that Mr Parkinson had a letter in his hand which he later found out was a letter of termination. Mr Parkinson told him that Bible Lane had failed an ACT Heath Inspection and was ‘fighting’ to keep the shop open.
[40] Mr Parkinson then repeated words to the effect that Mr Reicheneder should have been working that day, and that ‘he has a family of six and really needs the money’. Mr Parkinson then raised that he changed the roster to take the shift from Mr Reicheneder and questioned that he had not been working as many hours in the previous week.
[41] Mr Parkinson said to him that by reassigning the 14 October 2020 shift from Mr Reicheneder that he had ‘gone behind their backs’. He also said that Mr Sellick did not seek approval for making that change nor advise them that he made the change and in so doing had ‘basically committed fraud by changing their business’ financial status.’
[42] Mr Parkinson then said that ‘because of this you are being summarily dismissed’. When asked if there’s anything he could say to explain, Mr Parkinson gestured toward the letter in his hand and said: ‘you can if you want to but the decision has been made’. Mr Parkinson then handed him the letter of termination.
[43] Mr Sellick then returned keys and swipe card for the premises and left the premises.
[44] Mr Quincey O’Neill submitted that there was no reasonable grounds for the belief that the alleged conduct was sufficiently serious to justify his immediate dismissal. Mr Sellick received no written warning and there was no investigation of the alleged misconduct.
[45] Mr Quincey O’Neill referred to the decision in John Pinawin T/A RoseVi.Hair.Face.Body v Edwin Domingo 7 (Pinawin) where the Full Bench cited with approval the following by Senior Deputy President O’Callaghan in Harley v Rosecrest Asset Pty Ltd T/A Can Do International:
“… it would usually be necessary for the employer to establish what inquires or investigations were made to support a basis for holding the belief. It would also ordinarily be expected that the belief held be put to the employee, even though the grounds for holding it may not be. Failure to make sufficient inquiries or to put the accusation to the employee in many circumstances might lead to a view that there were no reasonable grounds for the belief to be held.” 8
[46] It was submitted that Bible Lane failed to outline what investigations or inquiries it made to support a basis for holding the belief that Mr Sellick committed fraud or breached any occupational health and safety procedures as claimed. Further, Bible Lane failed to put their belief to Mr Sellick before his dismissal and such failure was confirmed by Ms Parkinson in her oral evidence. Overall, it was submitted that Bible Lane’s failure to make sufficient inquiries and to put the accusation to Mr Sellick before his dismissal leads to the view that no reasonable grounds for the belief could be held.
The case for Bible Lane
[47] Bible Lane asserted that it terminated Mr Sellick’s employment because they believed on reasonable grounds that he defrauded its business and caused financial loss by modifying the company’s rostering system without consent so as to provide himself with a personal gain.
[48] Ms Parkinson stated that on 9 October after receiving the draft roster from Mr Sellick, she was approached by Mr Reichender, a father of multiple children, to ask for extra shifts. She then modified the roster and posted the final roster on the Easyemployer system.
[49] Ms Parkinson said that Mr Sellick had no authority to change the ‘Official Final Roster’ by removing Mr Reichender from the roster and allocating it to himself. In doing so, Mr Sellick cost the business more money as he was on a higher base hourly rate as opposed to Mr Reichender and his actions amounted to ‘obtaining a benefit by deception and larceny as a clerk or servant’.
[50] Ms Parkinson claimed that the management is solely responsible for the final say and publishing of the rosters including to add or remove shifts as it sees fit. Mr Sellick only had permission to draft rosters and was never given approval to approve rosters.
[51] In cross examination, Ms Parkinson was asked if she had requested from Mr Sellick an explanation for the change in the roster before her decision to dismiss him and said:
“I believed on reasonable grounds that Mr Sellick changed a document he was unentitled to change, that he was getting benefit and gain from as a result of being advised that he was no longer getting $750 a week for doing as little as one hour’s work. He now had to work to be paid, as JobKeeper payments were reduced.” 9
[52] In terms of the second ground for the dismissal, Ms Parkinson’s evidence was that she received an email from ACT Health advising that they attended upon Bible Lane on the evening of Saturday 10 October 2020 to inspect the business pertaining to the COVID-19 procedures.
[53] Ms Parkinson stated that Bible Lane was advised that the ACT Health Officers spoke to Mr Reicheneder who was on duty at the time and that he relayed the information to Mr Sellick. Although Mr Sellick was not on duty at the time of the inspection, he was the shift supervisor and his failure to advise the employer of the COVID-related health risk was inconsistent with his own statement that he was responsible for ‘ensuring problems which arose during his shift were escalated to the correct level of management’.
Consideration
[54] It is not in dispute that Mr Sellick was summarily dismissed. The letter of termination expressed the serious misconduct committed by Mr Sellick warranting summary dismissal as:
• changing the business documents without consent; and
• failure to advise of ACT Health’s attendance seeking COVID information
[55] Bible Lane formed the view that Mr Sellick’s conduct constituted fraud and serious breaches of occupational health and safety procedures.
[56] In deciding whether the conduct of an employee was sufficient to justify summary dismissal, the Commission does not have to make a finding, on the evidence, whether the conduct occurred. The Commission needs to find whether the employer had a reasonable belief that the conduct of the employee was serious enough to warrant immediate dismissal. It is not necessary for the Commission to determine whether the employer was correct in the belief that it held.
[57] The employer must establish that they had reasonable grounds to hold the belief.
[58] Section 12 of the Act defines ‘serious misconduct’ as having ‘the meaning prescribed by the regulations’. Reg 1.07 of the Fair Work Regulations 2009 provides:
Meaning of serious misconduct
(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.
(2) For subregulation (1), conduct that is serious misconduct includes both of the following:
(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;
(b) conduct that causes serious and imminent risk to:
(i) the health or safety of a person; or
(ii) the reputation, viability or profitability of the employer’s business.
(3) For subregulation (1), conduct that is serious misconduct includes each of the following:
(a) the employee, in the course of the employee’s employment, engaging in:
(i) theft; or
(ii) fraud; or
(iii) assault;
(b) the employee being intoxicated at work;
(c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.
(4) Subregulation (3) does not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.
(5) For paragraph (3)(b), an employee is taken to be intoxicated if the employee’s faculties are, by reason of the employee being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the employee is unfit to be entrusted with the employee’s duties or with any duty that the employee may be called upon to perform.
[59] In Pinawin 10, the Full Bench considered how the summary dismissal section of the Code is to be applied and said:
“[29] … There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.”
[60] On the evidence, I am not satisfied that Mr Sellick’s conduct could be reasonable grounds for a belief that his conduct constituted serious misconduct that justified immediate dismissal.
[61] In terms of changing the roster, I accept Mr Sellick’s explanation that he made the change on the roster to reassign the shift to himself on the basis that he thought it was an error. I accept that he was of the understanding that both Mr Reicheneder and Ms Parkinson would have received a further notification of this change he had made and would have raised with him if there were any issues.
[62] In the circumstances where Mr Sellick was not advised by Ms Parkinson that she had changed the roster to replace him with Mr Reicheneder, Mr Sellick’s belief that it was an error and his action to rectify the error was not unreasonable. Further, there was no suggestion that Mr Sellick had attempted to conceal his act.
[63] A finding of conduct amounting to fraud is a serious allegation and should not be lightly made and must be based on clear and cogent proof. 11
[64] There was no evidence that any investigation had taken place nor was Mr Sellick afforded an opportunity to explain his actions before Bible Lane decided that he had engaged in misconduct amounting to fraud. Absent any investigation or admission from Mr Sellick, I am not satisfied that such belief was based on reasonable grounds.
[65] As to the second allegation of serious misconduct pertaining to the inspection of ACT Health, I do not accept it amounted to a breach of any occupational and health and safety procedure.
[66] Despite some dispute about the time when the inspection occurred and whether another employee was present at the time, the evidence has demonstrated that it was another employee, Mr Reicheneder, that spoke to ACT Health. In the absence of any evidence from Mr Reicheneder, I accept Mr Sellick’s evidence that he relied on his conversation with Mr Reicheneder in coming to the view that the management had been informed of the inspection and that he was not required to take any action.
[67] I am not satisfied that there were occupational health and safety procedures in place which Mr Sellick had purportedly breached. In any event, the evidence did not establish that his conduct caused serious and imminent risk to the health or safety of other employees. Further, it is Bible Lane’s responsibility to ensure that the business complies with any public health direction.
[68] In all the circumstances, I am not satisfied that Mr Sellick’s dismissal was consistent with the Code.
Was the dismissal unfair?
[69] I now turn to consider if the dismissal of Mr Sellick was unfair within the meaning of the Act.
[70] A dismissal is unfair if the Commission is satisfied on the evidence before it that the circumstances set out at s.385 of the Act existed. Section 385 provides the following:
385 What is an unfair dismissal
A person has been unfairly dismissed if the FWC is satisfied that:
(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.
Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.
[71] There is no dispute that Mr Sellick was dismissed and that subsection (d) does not apply. I have already found that the dismissal was not consistent with the Code.
Was the dismissal harsh, unjust or unreasonable?
[72] I next consider whether Mr Sellick’s dismissal was harsh, unjust or unreasonable. The criteria the Commission must take into account are set out at s.387 of the Act:
387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:
(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(h) any other matters that the FWC considers relevant.
[73] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd12as follows:
‘... It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.’
[74] I am required to consider each of these criteria in reaching my conclusion13, which I now do.
Valid reason - s.387(a)
[75] The meaning of ‘valid reason’ in s.387(a) is drawn from the judgement of Northrop J in Selvachandran v Peteron Plastics Pty Ltd14. This meaning has been applied by this Commission and its predecessors for many years:
‘…, the adjective ‘valid’ should be given the meaning of sound, defensible or well-founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reasons must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must ‘be applied in a practical, commonsense way to ensure that’ the employer and employee are treated fairly, ...’15
[76] In other words, the reasons should be justifiable on an objective analysis of the relevant facts.
[77] There is no mandate for giving the ‘valid reason’ criterion any greater emphasis or weight than any of the other criteria in s 387. It is well settled that the statutory requirement to ‘have regard to’ or ‘take into account’ requires the Commission to give the matter(s) weight as a fundamental element in the decision making process. Even if it is found that there was a valid reason for the dismissal, an overall assessment must be made as to whether the dismissal was harsh, unjust or unreasonable.
[78] For reasons set out earlier in this decision, I am not satisfied that Bible Lane has established that the dismissal of Mr Sellick was based on reasonable grounds. The conduct involved did not amount to serious misconduct which justified summary dismissal. There was no valid reason for Mr Sellick’s dismissal.
Notification of the valid reason and opportunity to respond - s.387(b) and (c)
[79] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made,16 in explicit terms17 and in plain and clear terms.18 In Crozier v Palazzo Corporation Pty Ltd19 a Full Bench of the Australian Industrial Relations Commission dealing with similar provision of the Workplace Relations Act 1996 stated the following:
“[73] As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”20
[80] An employee protected from unfair dismissal must also be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. Such requirement will be satisfied where the employee is aware of the precise nature of the employer’s concern about his or her conduct or performance and has a full opportunity to respond to this concern. 21 This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality.22
[81] The requirement to notify of the reason, together with the requirement to provide an opportunity to respond to the reason, involves consideration of whether procedural fairness was afforded to Mr Sellick before his dismissal was effected.
[82] On the evidence before me, I am satisfied that Mr Sellick was notified of the reason for his dismissal but was not given an opportunity to respond to the reason. I am further not satisfied that procedural fairness was afforded to Mr Sellick in effecting his dismissal.
Unreasonable refusal by the employer to allow a support person - s.387(d)
[83] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.
[84] Mr Sellick was not provided with the opportunity to have a support person although there was no unreasonable refusal by Bible Lane to allow Mr Sellick to have a support person.
Warnings regarding unsatisfactory performance - s.387(e)
[85] A warning for the purposes of s.387(e) must clearly identify:
(a) the areas of deficiency in the employee’s performance;
(b) the assistance or training that might be provided;
(c) the standards required; and
(d) a reasonable timeframe within which the employee is required to meet such standards.23
[86] The warning must also “make it clear that the employee’s employment is at risk unless the performance issue identified is addressed.”24
[56] Mr Sellick was not dismissed for unsatisfactory performance and this criterion is therefore not relevant.
Impact of the size of the Respondent on procedures followed (s.387(f)), and the absence of dedicated human resources management specialist/expertise on procedures followed (s.387(g))
[87] Bible Lane is a small employer and does not employ any human resources staff. I am satisfied that the lack of human resource expertise had an effect on the procedures followed in effecting the dismissal.
Other relevant matters - s.387(h)
[88] Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant.
[89] There are no matters that require consideration under this part of the Act.
Conclusion
[90] Having considered each of the matters specified in s.387 of the Act and for the reasons set out above, I find that the dismissal of Mr Sellick was harsh, unjust and unreasonable, and accordingly unfair.
Remedy
[91] Having found that Mr Sellick was unfairly dismissed, it is necessary to consider what, if any, remedy should be granted to him. Mr Sellick seeks the remedy of compensation.
[92] Under section 390(3) of the Act, I must not order the payment of compensation to Mr Sellick unless:
a. I am satisfied that reinstatement is inappropriate; and
b. I consider an order for payment of compensation is appropriate in all the circumstances of the case.
[93] I am satisfied that reinstatement is inappropriate and Mr Sellick does not seek reinstatement.
[94] I am also satisfied that an order for the payment of compensation is appropriate, for the reasons I have found Mr Sellick’s dismissal was unfair.
[95] Section 392(2) of the Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation including:
(a) the effect of the order on the viability of the Respondent;
(b) the length of Mr Sellick service;
(c) the remuneration that Mr Sellick would have received, or would have been likely to receive, if he had not been dismissed;
(d) the efforts of Mr Sellick (if any) to mitigate the loss suffered by him because of the dismissal;
(e) the amount of any remuneration earned by Mr Sellick from employment or other work during the period between the dismissal and the making of the order for compensation;
(f) the amount of any income reasonably likely to be so earned by Mr Sellick during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the Commission considers relevant.
[96] In determining an amount to be paid as compensation, and as was noted by a Full Bench, “[t]he well-established approach to the assessment of compensation under s.392 of the FW Act… is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket (Sprigg).25 This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages26.”
Step 1: Estimate the remuneration the Applicant would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).
Step 2: Deduct monies earned since termination.
Step 3: Discount the remaining amount for contingencies.
Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.
Remuneration received, or likely to be received (s392(2)(c))
[97] While the evidence in this regard is limited, and while there is clearly an element of speculation in determining specifically how long Mr Sellick would have remained employed, I consider that it is likely that his employment would have continued for 16 weeks. I consider the effects of COVID-19 on the business, particularly in light of the phasing out of the JobKeeper scheme, may have impacted on whether his employment would have continued beyond this time.
[98] It was Mr Sellick’s unchallenged evidence that his average gross weekly earnings was $800.00.
Remuneration earned and income likely to be earned (s392(2)(e) and (f))
[99] Mr Sellick has not obtained any alternative employment since his dismissal. He therefore has not earned any remuneration from employment or any other work between the date of his dismissal and the making of the order for compensation
Length of service (s392(2)(b))
[100] Mr Sellick was employed from 13 July 2019 to 14 October 2020. This is a relatively short period of employment, and I consider it supports a reduction in the amount of compensation ordered.
Viability (s392(2)(a))
[101] There is no evidence before me as to the effect of an order for compensation might have on the viability of the Respondent.
Mitigation efforts (s392(2)(d))
[102] It was Mr Sellick’s evidence that he was unable to secure new employment despite having made a number of attempts to do so.
[103] On the material before me I am satisfied that Mr Sellick has taken reasonable steps to mitigate his loss suffered as a result of the dismissal.
Other relevant matters (s392(2)(g))
[104] There are no other matters relevant to this consideration. Specifically, I do not consider it necessary to discount or increase the amount for ‘contingencies’. This step is a means of taking into account the possibility that the occurrence of contingencies to which Mr Sellick was subject might have brought about some change in earning capacity or earnings.
Misconduct (s392(3))
[105] I made no finding that Mr Sellick had committed misconduct and I therefore will not make a deduction under this factor.
Shock, distress etc (s392(4))
[106] The amount of compensation does not include a component for shock, humiliation or distress.
Compensation cap and calculation (s392(5) and (6)
[107] Mr Sellick’s estimated remuneration for 16 weeks is $12,800.00. He had been unemployed for 18 weeks at the time of his dismissal and had not earned other income during that time.
[108] I consider a deduction of 20% should be applied for the relatively short period of service, which reduces the amount to $10,240.00.
[109] This amount is less than the amount of remuneration Mr Sellick was entitled in his employment with Bible Lane during the 26 weeks immediately before the dismissal.
Conclusion
[110] In my view, the application of the Sprigg formula does not yield an amount that is clearly excessive or inadequate.
[111] For the reasons outlined above, I am satisfied that a remedy of compensation in the amount of $10,240.00. less appropriate taxation in favour of Mr Sellick is appropriate in the circumstances of this case. An order to that effect will be issued with this decision.
DEPUTY PRESIDENT
Appearances:
M Quincey O’Neill for Ephraim Sellick.
K Parkinson for Bible Lane Enterprises Pty Ltd.
Hearing details:
2021.
Canberra and Sydney (By video):
February 23.
Printed by authority of the Commonwealth Government Printer
<PR728738>
1 Transcript PN110.
2 Transcript PN110 and 117.
3 Transcript PN111-112.
4 Transcript PN113.
5 Transcript PN120.
6 Transcript PN115.
7 [2012] FWAFB 1359.
8 Ibid at [18].
9 Transcript PN148.
10 [2012] FWAFB 1359.
11 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd and Others [1992] HCA 66.
12 (1995) 185 CLR 410 at 465 per McHugh and Gummow JJ.
13 Sayer v Melsteel[2011] FWAFB 7498.
14 (1995) 62 IR 371.
15 Ibid at 373.
16 Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41].
17 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.
18 Previsic v Australian Quarantine Inspection Services Print Q3730.
19 (2000) 98 IR 137.
20 Ibid at 151.
21 Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7.
22 RMIT v Asher (2010) 194 IR 1, 14-15.
23 McCarron v Commercial Facilities Management Pty Ltd t/a CFM Air Conditioning Pty Ltd [2013] FWC 3034, [32].
24 Fastidia Pty Ltd v Goodwin Print S9280 (AIRCFB, Ross VP, Williams SDP, Blair C, 21 August 2000), [43]-[44].
25 (1998) 88 IR 21.
26 [2013] FWCFB 431.
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